The People Company

If you looked at global rankings of top companies by market capitalisation, you would be surprised to learn how they changed in the last years. Back in 2010, ExxonMobil ranked first, and there were other oil and manufacturing multinationals in the top 20. Today, seven out the top 10 positions are for tech and digital companies, with Apple, Alphabet and Microsoft in the winners’ spots (source: PwC).

This means digital transformation played it hard in disrupting old business models, pushing forward the organisations which managed to evolve their structure and become part of more comprehensive, digital ecosystems. However, it would naïve to state that traditional companies will soon step out of the game or will be permanently beaten.

The future is probably propitious for digital hybrid business models, as some analysts define them. That’s the case of companies that succeed in leveraging their traditional core competences, at the same time evolving through a wise use of digital technologies and a more accurate understanding of market and customers trends.

The path towards digital hybrid organisations typically starts with innovative pilot projects, injecting digital change into selected processes, departments or lines of business, and measuring their results before gradually extending them all over the company. The Renault-Nissan-Mitsubishi Alliance is a good example of this cautious, but forward-looking approach.

Advanced data analytics and machine learning techniques can encourage the organisation to move closer to customers, offering targeted products for specific user segments. Ever received an e-mail from Starbucks? The company used to send about 30 customised proposals per week, but now its digital marketing engine pumps out 400 thousand e-mails every seven days.

Even native digital businesses such as Amazon are entering the analogical scene. With Whole Foods acquisition, the e-commerce giant clearly showed its interests for retail food, and Amazon Go hi-tech stores are generously paying the investment back. That’s why up to 3 thousand new physical shops are expected to be inaugurated all over the world by 2021.

These examples point out that digital hybrid models are more likely to be preferred to 100% digital organisations, as they will be able to add value to existing corporate assets through technology - and be more competitive in the long run.